In 2007 and 2008, Canada was affected by the global financial crisis that had begun with the U.S. housing collapse. By early 2009, the Canadian economy was in a recession with Y

Question

In 2007 and 2008, Canada was affected by the global financial crisis that had begun with the U.S. housing collapse. By early 2009, the Canadian economy was in a recession with Y < Y*. What economic policies were implemented to close the output gap?

Quizplus · Accepted Answer

Canada implemented both expansionary monetary policy, such as lowering interest rates, and expansionary fiscal policy, such as increased government spending, to stimulate the economy and close the output gap during the recession.

In 2007 and 2008, Canada Was Affected by the Global